NetApp blames misfiring major accounts for revenue blip

Storage vendor blames lower-than-expected Q2 revenue on nine underperforming accounts

NetApp claims the lacklustre performance of some of its major account customers is to blame for banking lower-than-expected second-quarter revenue.

The storage vendor achieved revenue of $1.5bn (£950m) during Q2 2012, up from $1.2bn the previous year.

Meanwhile, the firm's GAAP net income dropped from $175.3m in Q2 2011 to $165.6m this year.

During a conference call with analysts – a transcript of which can be found here – NetApp's chief financial officer Steven Gomo admitted the vendor's revenue was lower than expected.

This he attributed to underperformance of nine of NetApp's major account customers in the US.

"Of the 46 accounts in the programme, just nine of the US accounts produced the entire shortfall from the mid-point of our revenue guidance," he said.

Tom Georgens, NetApp's chief executive, said the firm had not been anticipating the same level of sequential growth as last year, but was expecting its major accounts to have performed better.

"Fortunately, most of the unexpected shortfall was confined to a small number of accounts where the customer-specific dynamics can be understood," he said.

"Outside of those nine major accounts, our enterprise business was generally strong [and] we saw record sales from our indirect channels, representing the highest ever percentage of our revenue."

Gomo described NetApp's European and APAC performance as "robust" and said its volume channel business had enjoyed a "very strong" quarter.

"Our largest channel partners demonstrated solid growth," he said. "Where we saw underperformance to our revenue forecast [was] within our major account programme."